Business is at the nexus of the Great Recession and the Great Transformation of Marketing. The tried-and-true marketing approaches, born of an advertising industry that is more than 100 years old, are losing their effectiveness.
Agencies must make fundamental changes to a business model that is still too dependent on mass communications in a world where we can reach audiences one person at a time. So dramatic are these changes that we can now think in terms of buying audiences instead of media.
Of all the critical changes needed in the business of advertising, here are 10 of the most urgent and important.
Imperative #1:Developing a skill set built around “engagement” instead of “interruption.”
Agencies are used to delivering “exposure” for their client’s brand messages, measured by such things as reach, frequency, and cost-per-impression. With the consumer firmly in control of their media viewing choices and habits, no amount of exposure matters if no one’s paying attention. What agencies sell -- or should sell -- is “engagement.” The metrics of engagement are completely different from the traditional media measurements of the past, including such things as attentiveness, receptivity, and buzz potential. Exposure is about efficiency. Engagement is about effectiveness.
Imperative #2: Establishing a“digital competency” in place of a “digital department.”
The digital department of the 2010s is like the television department of the 1950s. The digital revolution has been around long enough that it’s time for a specialized digital “department” to go away. Virtually every position that exists in digital departments has a natural home in the already-existing functions of the agency. All it takes is a mandate from management that digital will be a competency of the agency, not a department.
Imperative #3: Focusing core competencies on “one-to-one” instead of “one-to-many.”
Agency professionals have an irrational fear of data and databases, which are clearly the future of marketing. Thanks mostly to the internet, mass audiences can now be identified and targeted in ways that make much better use of marketer’s money. Agencies need to move from mass messaging to mass customization. They know broadcasting, but must now learn narrowcasting.
Imperative #4: Creating “consumer-to-consumer” communications instead of just “brand-to-consumer” communications.
The agencies that grew up in an era of controlled communications now have to learn how to serve their clients in a world of open conversations. This requires a very different skill set and service offering. It also means moving beyond “consumers as audience” to “consumers as media.”
Imperative #6: Implementing production systems that are organic instead of linear.
Most agencies still have straight line approach to production, based on a legacy system of trafficking work out the door and then moving on to the next job. But in the digital world most jobs never die. A website is never done. Online campaigns can be constantly monitored and optimized. Agencies must adjust both their workflow and compensation systems to accommodate production work -- and rework -- in “real time.”
Imperative #7: Developing channel plans in place of media plans.
The view of progressive media professionals is that everything is a channel, and what’s really needed in place of the conventional media plan is a holistic channel plan that potentially includes all three major forms of communications channels: bought (paid media) earned (non-paid channels including such things as viral videos), and owned (channels owned by the brand itself, such as online properties, employees, stores, etc).
Imperative #8: Creating brand relationships instead of just brand transactions.
How many times have you heard an agency executive say to a client, “Our job is to get the consumer to buy the product once; it’s your job to take it from there.”Agencies have historically been focused on helping to make the sale. But in a marketplace where the actual experience with the brand forms strong customer opinions that get circulated worldwide at the touch of a button, agencies have an important opportunity to help clients create and maintain positive brand relationships during the “purchase” and “post-purchase” phases, not just “pre-purchase.”
Imperative #9: Going beyond the “big idea” to big multi-channel ideas.
The days of a writer/art director holing up in a room to concept the “big idea” for a broadcast campaign are over. No doubt brands still need powerful creative ideas to win in the marketplace, but what’s needed in place of one big, strategic TV-centric idea is a lot of smaller tactical ideas that can live in a number of channels. It’s surprising how many agency creative teams still lack this perspective.
Imperative #10: Realizing that “account management” in now two different jobs.
While there certainly are examples of the “whole-brained” account executive that is talented both strategically and logistically, these two skills sets rarely come in the same package. By expecting the “account executive” to do both these jobs, agenciesare producing persistent client dissatisfaction with the agency’s strategic contributions and level of proactive thinking. This is not only because many account people lack the strategic skills, but because they simply don’t have the time. Add to that the complexity of managing digital assignments, and it absolutely mandates splitting the traditional account service job into two: strategic planning and project management.
Imperative #10: Selling value created instead of hours worked.
It’s time for agencies to come to grips with what they’re really selling. Clients don’t buy your costs (your hours, overhead, or your staffing plan) they buy the value you create for their brands. Yet agency accounting and compensation system are built around time and efficiency rather than outcomes and effectiveness. Especially given the increasing cost pressures from clients, it’s time for agencies to start counting the right things and craft compensation approaches that align the economic incentives of the agency with those of the client.
It’s been said that you can’t really manage change; you can only be ahead of it. Agencies, no matter how smart or resourceful, won’t be able to “manage” their way out of these disruptive changes in the marketplace. They can, however, devote their considerable creativity to staying one step ahead.
(Tim Williams leads the consultancy Ignition (www.ignitiongroup.com), and is author of the new book ‘Positioning for Professionals: How Professional Knowledge Firms Can Differentiate Their Way to Success’. On August 19 in New Delhi, Williams will present ‘Agency 2.5: How Agencies Are Transforming for the Future’ for the IAA India Chapter.)